Category: Stock Market

The PointsBet Holdings Ltd (ASX: PBH) share price is trading lower on Thursday morning.

At the time of writing, the sports betting company’s shares are down 4% to $6.40.

This means the PointsBet share price is now down 9% in 2022.

Why is the PointsBet share price falling?

The weakness in the PointsBet share price today appears to have been driven by a broker note out of Credit Suisse.

Although the broker continues to recommend the company’s shares as a buy, it has taken an axe to its price target ahead of its first half results next month.

According to the note, Credit Suisse has retained its outperform rating and cut its price target by 30% from $12.80 down to $8.00.

This implies potential upside of 25% for investors. And while this is clearly still very attractive, it pales in comparison to the previous target which suggested 100% upside.

What did the broker say?

Credit Suisse notes that PointsBet is aiming to launch in New York later this month following highly successful competitor launches last week. So successful, the state became the biggest sports betting state in the US after just 12 hours of operation with 5.8 million user sign ins.

Although PointsBet will have some catching up to do when it eventually launches, the broker is pleased that the market may be larger than it was expecting. In addition, it notes that PointsBet’s promotional deal is one of the most generous on offer, which could bode well for signups.

However, it does have concerns over the intense competition, lower than expected market share gains, and the prospect of another capital raising being required in the not so distant future.

Nevertheless, it remains positive on the PointsBet share price at the current level. Particularly given its New York licence, which it suspects could make the company an attractive target if the industry consolidates.

The post PointsBet (ASX:PBH) share price falls on mixed broker note appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Pointsbet Holdings Ltd. The Motley Fool Australia has recommended Pointsbet Holdings Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The National Australia Bank Ltd. (ASX: NAB) share price is in the green this morning amid news the bank is upping its hold on the health payments space.

NAB’s health payments subsidiary HICAPS – utilised by all of Australia’s private health funds and more than 94,000 health service providers – has proposed to acquire digital health claiming technology business, LanternPay.

At the time of writing, the NAB share price is $29.40, 0.55% higher than its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) has gained 0.2% this morning.

Let’s take a closer look at what could be NAB’s next purchase.

NAB share price higher amid new payments purchase

The NAB share price is moving higher on Thursday. Meanwhile, the bank has proposed to acquire a payment technology start-up promising to deliver real-time approvals and faster payments from medical healthcare schemes.

LanternPay is designed to simplify payments processes for medical providers working alongside schemes such as Medicare, workers compensation, and the National Disability Insurance Service (NDIS).

The bank plans to integrate the technology into HICAPS – an acronym for Health Industry Claims and Payments Service.

If all goes to plan, it expects that a new digital HICAPS will be rolled out over the course of this year.

Additionally, according to reporting by the Australian Financial Review, the purchase could lead to a HICAPS app that may see Australians paying for treatments with smartphones at practices without payment terminals.

On the proposed acquisition, NAB’s group executive for business and private bank Andrew Irvine commented:

The healthcare sector is already one of the country’s largest providers of employment, and the fifth largest contributor to Australia’s GDP. Australian healthcare payment systems have been cumbersome – resulting in disjointed payment experiences for patients and complexity for healthcare providers.

Integrating NAB’s HICAPS with LanternPay technology will over time deliver a seamless digital customer experience… Customers who previously might have waited days for a reimbursement from the NDIS for example, will now receive this payment on the spot. For many Australians, this will be an absolute game changer.

LanternPay is owned by platform developer, InLoop. The acquisition is subject to conditions including regulatory approval.

It follows the acquisition of Whitecoat by Commonwealth Bank of Australia (ASX: CBA) last year. The digital healthcare services directory is continuing its pivot towards payment services in the wake of the acquisition.

Right now, the NAB share price is 1.9% higher than it ended in 2021.

The post NAB (ASX:NAB) share price gains following digital health claim acquisition appeared first on The Motley Fool Australia.

More reading

• Is Westpac (ASX:WBC) going to be the best big 4 bank for dividends in 2022?
• Could this impact the performance of ASX 200 banks more than interest rates in 2022?
• What made the NAB (ASX:NAB) share price so appealing in 2021?
• These were the top 5 ASX 200 bank shares in 2021
• Here’s why this top ASX broker picks NAB shares out of the big four banks

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Is it possible that Westpac Banking Corp (ASX: WBC) could be the best big four ASX bank for dividends in 2022?

There are a couple of different factors that decide how large a company’s dividend yield is going to be.

One key factor is the size of the dividend paid. Westpac (and a lot of companies) make a net profit after tax each year. The board just has to decide how much of its profit is going to be paid out as a dividend. Half of the profit? All of it? None? Companies consider what the profit could be used for if left within the business, but also consider what the shareholders may want.

Another factor is the valuation. The higher the earnings multiple, the lower the dividend yield.

Those are the types of things that can influence dividend yields when comparing Westpac to Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB) and Australia and New Zealand Banking Group Ltd (ASX: ANZ).

Will Westpac have the biggest dividend yield?

Current estimates on Commsec put the Westpac share price at 13x FY22’s estimated earnings and a projected grossed-up dividend yield of 8%.

Turning to the biggest bank, the CBA share price is valued at 20x FY22’s estimated earnings with a forecast grossed-up dividend yield of 5.4% according to Commsec.

Next is NAB. Commsec’s figures put the NAB share price at 15x FY22’s estimated earnings with a potential grossed-up dividend yield of 6.8%.

Finally, the ANZ share price is valued at 13x FY22’s estimated earnings with a possible grossed-up dividend yield of 7.5% according to Commsec.

So, just on Commsec’s numbers, Westpac is projected to have the biggest dividend yield in 2022 partly down to the fact it is the seemingly the (joint) cheapest bank based on the estimated earnings for FY22.

But is the dividend worth pursuing at the current Westpac share price?

Historical performance may or may not be a future guide to dividends.

Income investors may want to know that Westpac cut its dividend the most during the COVID-19-hit year of 2020. However, it’s possible that other one-off factors impacted Westpac in 2020, as well as the pandemic.

However, whilst projections are just estimates, Commsec numbers suggest growth of the annual Westpac dividend from $1.22 per share in FY22, to $1.30 per share in FY23 and then to $1.39 per share in FY24.

That means by FY24 Westpac could be paying a grossed-up dividend of 9.2%. However, that’s still a few years away and are just estimates at this point.

Is it a buy?

There are a number buys and hold ratings from brokers on Westpac at the moment. Citi currently rates Westpac as a buy with a price target of $27.50. However, Morgan Stanley currently rates the Westpac share price as a hold, though the price target is $24.80 which still implies a potential double digit rise of the .share price.

The post Is Westpac (ASX:WBC) going to be the best big 4 bank for dividends in 2022? appeared first on The Motley Fool Australia.

More reading

• 2 buy-rated ASX 200 dividend shares with big yields
• Could this impact the performance of ASX 200 banks more than interest rates in 2022?
• What made the NAB (ASX:NAB) share price so appealing in 2021?
• These were the top 5 ASX 200 bank shares in 2021
• Why the CBA (ASX:CBA) share price jumped 23% in 2021

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Rio Tinto Limited (ASX: RIO) share price could be one to watch over the coming weeks.

In 2022, the company’s shares have risen 7.15% in value for its shareholders. In contrast, the S&P/ASX 200 Index (ASX: XJO) has fallen 0.08% to 7,438.9 points over the same timeframe.

At Wednesday’s market close, the mining giant’s shares finished the day up 0.85% to $107.27.

Canadian watchdog asked to investigate potential conflict of interest

According to the Australian Financial Review, Canada’s Ethics Commissioner has received a request to investigate incoming Rio Tinto chair, Dominic Barton’s job appointment.

The probe is centred around whether Mr Barton broke ethics rules by meeting with the mining giant in October. At that time, Mr Barton was serving as Canada’s ambassador to China.

It’s worth noting that Rio Tinto has a considerable interest in the Asian superpower. In fact, the company has been supplying iron ore to China Baowu. The latter, which is state-owned has become the largest iron and steel company in China.

Reportedly, two MPs from the New Democratic party wrote to the commissioner, Mario Dion last Friday. The letter voiced concerns regarding Mr Barton’s meeting with Rio Tinto executives before being awarded the high-ranking job.

The miner announced that Mr Barton secured the role on 20 December, swapping out current chair, Simon Thompson. This is roughly ten weeks after the October meeting with senior Rio Tinto officials, and two weeks before leaving his post as a diplomat.

The website for the office of the conflict of interest and ethics commissioner, states that former appointed or elected officials are restricted from being employed by private companies that have had direct or significant dealings in their final 12 months of working for the government.

Mr Barton is expected to join Rio Tinto’s board in early April, before taking up the chair position on 5 May.

Rio Tinto briefly touched on the subject, saying it’s aware of the investigation and that it would not impact Mr Barton’s appointment.

Rio Tinto share price summary

Despite travelling higher in 2022, it has been a disappointing 12 months for Rio Tinto shareholders. The company’s shares have lost around 11% in value since this time last year.

Rio Tinto has a market capitalisation of $39.49 billion and approximately 371.22 million shares on hand.

The post Own Rio Tinto (ASX:RIO) shares? Here’s why the miner’s new chair appointment is making waves appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Whitehaven Coal Ltd (ASX: WHC) share price could be heading meaningfully higher from here in 2022.

That’s the view of one of Australia’s leading brokers, Goldman Sachs.

What is the broker saying about the Whitehaven share price?

As I mentioned here earlier today, the team at Goldman Sachs has been looking at the mining sector and remains positive on its outlook.

The broker expects this to be underpinned by an expected stabilisation and modest recovery in Chinese construction activity post Lunar New Year, further broad improvement in rest of the world demand, structural supply shortages, and low inventories across most commodities.

And with the Whitehaven Coal share price pulling back from its highs in recent months, its analysts see this as a buying opportunity for investors.

So much so, Goldman has upgraded the company’s shares to a buy rating with a $3.60 price target. Based on the current Whitehaven Coal share price of $2.88, this implies potential upside of 25% over the next 12 months.

What did Goldman Sachs say?

Goldman commented: “We remain positive on thermal into 2022 with a strong recovery in global power demand and ongoing power shortages, strong gas prices, and supply side issues. We also remain constructive on met coal which we see as being undersupplied, but do expect prices to moderate in 2022.”

“We upgrade WHC to Buy (from Neutral) with the stock down c. 25% off its 12-m high (A$3.64/sh) and trading at a 15% discount to our NAV & c. 50/10% FCF yield in FY22/FY23. WHC is a compelling de-gearing story in our view,” it concluded.

For similar reasons, Goldman also has a buy rating and $1.80 price target on the shares of Coronado Global Resources Inc (ASX: CRN). This compares favourably to the latest Coronado Global Resources share price of $1.37.

The post Goldman tips Whitehaven (ASX:WHC) share price to jump 25% appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Crown Resorts Ltd (ASX: CWN) share price will be one to watch on Thursday morning.

This follows the release of an update on the Blackstone takeover approach.

Crown share price on watch after takeover bid increased

This morning Crown revealed that it has received a revised non-binding proposal from Blackstone to acquire it by way of a scheme of arrangement at a price of $13.10 cash per share. This represents an increase of $0.60 cash per share compared to the previous offer of $12.50 cash per share received in November.

The new proposal represents a 12.5% premium to the current Crown share price of $11.63.

According to the release, Blackstone made the revised proposal after considering non-public information provided by Crown during initial due diligence.

What’s next?

Once again, the revised proposal is subject to a number of conditions. These include further due diligence, unanimous support and recommendation by the Crown Board, the execution of a binding implementation agreement, and Blackstone receiving final approval from regulators.

The Crown Board advised that it considers that it is in the interests of shareholders to engage further with Blackstone on a non-exclusive basis in relation to the revised proposal. It also revealed that should a binding offer be made at no less than $13.10 cash per share, the Crown Board’s current unanimous intention would be to recommend the proposal. This is in the absence of a superior proposal and subject to an Independent Expert report.

For now, it advised that Crown shareholders do not need to take any action in relation to the revised proposal. The company also warned there is no certainty that the discussions between Crown and Blackstone will result in a change of control transaction.

The post Crown (ASX:CWN) share price on watch after Blackstone ups takeover bid appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
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• Leading fund manager says these blue-chip ASX shares are buys right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Are you looking for dividend shares to buy? If you are, then you might want to look at the shares listed below.

Here’s why these ASX 200 dividend shares could be worth considering right now:

DEXUS Property Group (ASX: DXS)

The first ASX 200 dividend share to consider is this Australian real estate company.

DEXUS has a high quality portfolio of office, industrial and retail properties. In fact, it recently revealed that 124 of its 189 assets have been externally valued, resulting in a ~$421 million or 2.4% increase in valuation. Management believe this demonstrates the strong demand for high quality industrial property.

Looking ahead, the company’s development pipeline remains strong and stood at $15.4 billion at the last count. This provides DEXUS with an opportunity to grow its portfolios and enhance future returns.

Macquarie is a fan of DEXUS and has an outperform rating and $11.93 price target on its shares.

As for dividends, the broker is forecasting dividends per share of 53.7 cents in FY 2022 and 57.5 cents in FY 2023. Based on the current Dexus share price of $10.72 this will mean yields of 5% and 5.35%, respectively.

Westpac Banking Corp (ASX: WBC)

Another ASX 200 dividend share to look at is this banking giant. It has been tipped as a buy by the team at Morgans following a sharp pullback in recent weeks. This was driven by Australia’s oldest bank’s margin outlook and doubts over its cost cutting plans.

Morgans notes that its shares are the cheapest among the big four and, importantly for income investors, offer the biggest forecast dividend yields.

Its analysts have pencilled in fully franked dividends per share of $1.23 in FY 2022 and then $1.62 in FY 2023. Based on the current Westpac share price of $21.67, this will mean yields of 5.7% and 7.5%, respectively.

Morgans has an add rating and $29.50 price target on Westpac’s shares.

The post 2 buy-rated ASX 200 dividend shares with big yields appeared first on The Motley Fool Australia.

More reading

• Could this impact the performance of ASX 200 banks more than interest rates in 2022?
• These were the top 5 ASX 200 bank shares in 2021
• Why did the Westpac (ASX:WBC) share price significantly underperform the other big banks in 2021?
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Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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2021 was an okay year for the Woolworths share price.

The supermarket giant ended 2020 trading at $33.30 and, despite a rocky start to the year, had surged to a 52-week high of $44.06 by June 2021.

However, as of the final close of last year, the Woolworths share price was trading at $38.01. That represents a 14.14% gain for the year.

While that’s a decent result, it only beat the broader market by a nose. Over the course of 2021, the S&P/ASX 200 Index (ASX: XJO) gained 13%.

Let’s take a look back at the news that moved the Woolworths share price last year.

Here’s what drove the Woolworths share price in 2021

The Woolworths share price had a decent run last year, driven by a major demerger, an attention-grabbing takeover offer, and, finally, a disappointing trading update.

Endeavour demerger

Let’s start with possibly the biggest news from Woolworths last year; its multi-billion demerger of its drinks and hotels leg, Endeavour Group Ltd (ASX: EDV).

That saw the company split from many renowned businesses, including Dan Murphy’s and BWS.

The Woolworths share price tumbled 11% on 24 June – the day Endeavour floated – likely reflecting the loss of the branch.

Through the demerger, Woolworths’ shareholders received 1 share in the newly formed company for each share they owned in the parent company.

Financial year 2021 earnings

Of course, the supermarket giant released its results for financial year 2021 shortly after.

Over the 12 months ended 30 June, Woolworths’ sales grew by 5.7% to reach approximately $67 billion.

It was likely little surprise that its e-commerce sales also boomed, increasing 58% to around $5.6 billion.

The company ended up with a net profit after tax of around $1.9 billion ­– a 22.9% increase on that of financial year 2020.

The next major news to move the Woolworths share price came in December.

API takeover bid

Then, the company jumped in the middle of a long-standing takeover arrangement, outbidding Wesfarmers Ltd (ASX: WES) for Australian Pharmaceutical Industries Ltd (ASX: API) by more than $100 million.

Woolworths offered API shareholders $1.75 per security to acquire the company. That was 12.9% more than Wesfarmers’ $1.55 per share bid.  

However, the supermarket’s bid to acquire the owner of Priceline was looked at with suspicion by some, including the Pharmacy Guild of Australia.

While 2021 ended with the takeover offer hanging in the balance, Woolworths ultimately withdrew its bid last week. Wesfarmers is expecting to acquire API in the current quarter.

The Woolworths share price’s final hurdle

Finally, the retailer ended the year on an unfortunate note.

It released a trading update detailing the impact of COVID-19′s Delta strain – which took hold of much of Australia in the first half of financial year 2022 – on 14 December.

Within the update, Woolworths CEO Brad Banducci commented:

The first half of [financial year 2022] has been one of the most challenging halves we have experienced in recent memory due to the far-reaching impacts of the COVID Delta strain and its impact on our end-to-end stock flow and operating rhythm.

The news saw the Woolworths share price dip 7.6%, ending the final month 6.8% lower than it started it.

And it hasn’t performed much better since. Year to date, the Woolworths share price has slipped 6.2%, ending Wednesday’s session trading for $36.06.

The post How did the Woolworths (ASX:WOW) share price perform in 2021? appeared first on The Motley Fool Australia.

More reading

• There were the 5 best performing ASX 200 retail shares of 2021
• Woolworths (ASX:WOW) supply woes continue with retailer receiving half of normal deliveries
• ASX 200 (ASX:XJO): Woolworths withdraws API proposal, tech shares rebound
• If supermarkets are ‘COVID winners’, why is the Woolworths (ASX:WOW) share price sliding into 2022?
• API (ASX:API) share price crashes 12% after Woolworths withdraws takeover offer

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Goldman Sachs has been running the rule over the Australian mining sector and is feeling very positive.

The broker believes that the current commodity up-cycle is different from the last two commodity booms. It notes that the 2003-2007 super cycle was driven by demand growth from China coupled with a slow supply response from the mining sector after decades of low supply growth. Whereas the 2009-2011 boom was driven by a post-GFC demand rebound but then a strong supply response.

On this occasion, Goldman believes things will be different.

Its analysts explained: “Five years of mining sector deleveraging and capital discipline from 2015-2021 and a lack of high-quality greenfield projects across most commodities, the rapid emergence of decarbonisation capex by the major miners, and ongoing challenges of permitting new projects, set this cycle up as more supply-side driven over the medium term before switching to more demand driven from 2025 with increased global investment in green capex.”

In light of this positive commodity price backdrop, the broker expects free cash flow and earnings per share growth will remain strong in the Australian mining sector. This is even in the face of increasing opex and capex inflation.

Goldman also highlights that a lot of value can be found in the sector at current levels.

“From a valuation perspective, the sector is trading on an attractive 4x NTM EBITDA but at 1.05x NAV, although we note that in the 2003-2007 and 2009-2011 commodity bull markets, most stocks (diversified miners and pure plays) traded at premiums to NAV, indicating the sector can move higher,” it explained.

But which mining shares should you buy?

Among Goldman’s top picks in the mining sector are Rio Tinto Limited (ASX: RIO) and South32 Ltd (ASX: S32).

Its analysts commented: “We are Buy rated on RIO trading at 0.9x NAV and discounting a long run iron ore price of US$62/t (vs. GSe long run of US$67/t real) and trading on a FCF yield of 12% in 2022E (based on our US$110/t Fe forecast for 2022) and our view that RIO will return to production growth in mid-2022 on higher iron ore and copper volumes.”

The broker has a $125.60 price target on Rio Tinto’s shares.

As for South32, Goldman said: “We are Buy rated on S32.AX (on Conviction List) with strong FCF (19% base case for FY22), exposure to base metals (aluminium & alumina c. 50% of FY22 EBITDA; we are bullish aluminium on a multi-year view, zinc/nickel c. 20%), and earnings upside from the Sierra Gorda copper acquisition (c. 15% upside to our EBITDA; not in our numbers pending deal completion; expected 1Q22).”

Goldman has lifted its price target on South32’s shares to $4.70.

One mining share that the broker thinks investors should avoid is Fortescue Metals Group Limited (ASX: FMG). This is due largely to its current valuation, which Goldman feels is excessive compared to peers.

It explained: “We remain Sell rated on FMG on relative valuation (1.8x NAV) and trading at a significant premium to BHP & RIO on a EV/EBITDA basis (5.4x vs. BHP & RIO on c. 4x), low grade iron ore price risk (GSe 68% price realisation for Dec Q), low FCF yield (3-5%) vs. BHP & RIO (10-12%) and capex and execution risks on the Iron Bridge & FFI set of projects.”

The broker believes the Fortescue share price is only worth $13.50 today. This implies significant downside from current levels.

Fellow mining giant BHP Group Ltd (ASX: BHP) is currently not rated by Goldman Sachs. This is due to its team advising on the Woodside Petroleum Limited (ASX: WPL) merger.

The post Goldman Sachs says buy Rio Tinto and South32 shares but sell Fortescue now appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Why Domino’s, Fortescue, Medibank, and Metcash shares are falling
• Why is the South32 (ASX:S32) share price hitting all-time highs today?
• Leading brokers name 3 ASX shares to sell today
• ASX 200 (ASX:XJO) midday update: Afterpay-Block deal approved, Fortescue downgraded

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The BHP Group Ltd (ASX: BHP) share price finished 2021 in the red despite a positive start and end to the year.

The mining giant’s shares shed 2% during the year, falling from $42.43 to $41.50. In contrast, the S&P/ASX 200 Index (ASX: XJO) gained around 13%.

Let’s take a look at what was behind the BHP price fall in 2021.

The year that was

BHP shares performed well up to the start of August, with the company’s share price hitting a yearly high of $54.06 on 4 August. In fact, between market close on 31 December 2020 and this 52-week high, shares increased 27%.

Iron ore prices gained 15% during this time, rising from US$158.15 to $182.51. In February, investors reacted positively to strong financial results for the first half of the 2021 financial year. The board revealed a record half-year dividend of US$1.01 per share.

In April, BHP released a well-received quarterly review showing record production at Western Australia Iron Ore. The company also delivered the best ever production at the Goonyella Riverside metallurgical coal mine in Queensland. This was followed by more record production in July in Western Australia, while Olympic Dam achieved the highest ever copper and gold production.

But then the company’s shares came crashing. The BHP share price fell 33% between market close on 4 August and 4 November. During this time, the iron ore price fell nearly 47% from US$182.51 to $97.17.

Around this time, BHP also announced it would merge its oil and gas portfolio with Woodside Petroleum Limited (ASX: WPL) to create a global energy company.

In late November and December, the BHP share price started lifting again. Rising iron ore prices likely contributed to the increase. Between market close on 17 November and 31 December, the company’s share price gained more than 15%. In the same time frame, iron ore prices increased by nearly 30% from US$92.76 to US$120.20.

In December, the company moved forward on its plan to unify its two companies structure into a single listing on the ASX. BHP’s current dual listing corporate set-up followed its amalgamation with Billiton in 2001.

Also that month, the Australian Competition and Consumer Commission (ACCC) gave the tick of approval on the sale of BHP’s petroleum assets to Woodside.

Shares also gained on news the company had pulled out of its bidding war with Wyloo Metals for nickel miner Noront Resources (TSXV: NOT).

Looking ahead

Looking ahead, Macquarie analysts rate BHP as a buy with a price target of $52. As my Foolish colleague Tristan reported recently, Macquarie believes the company’s shares are valued at under 10x FY22’s estimated earnings.

Morgans has also given BHP shares a buy rating, with a price target of $45.70. Shares in BHP have already gained more than 12% in the past month.

Share price snap shot

While the BHP share price underperformed the benchmark index in 2021, the new year is starting well for the company, Its shares are up 8.6%% so far in January.

BHP has a huge market capitalisation of nearly $133 billion based on its current share price.

The post Why did the BHP (ASX:BHP) share price struggle so much in 2021? appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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